Paragraph (a) specifies a trigger for the calculation of an alternative payment rate for children’s hospitals. The trigger is any requirement that the days, costs, and revenue associated with MA-eligible patients who also have private health insurance be included in a children’s hospital’s disproportionate share hospital (DSH) payment limit. If these days, costs, and revenue are included, then the commissioner must calculate the alternative payment rate described in paragraph (b), compare the alternative rate to the DSH rate, and reimburse the children’s hospital at the higher rate.

Paragraph (b) specifies the alternative rate, prohibits a children’s hospital from receiving payments under both the alternative rate and the DSH rate, and directs the commissioner to consider the interaction of the alternative rate and inflation adjustments whenever hospital rates are rebased.